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Texas Payroll Tax and Labor Laws
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Did you know that Texas has no state income tax?
However, employers still have a number of things to keep in mind when it comes to paying employees and collecting taxes from them. This page gives Texas small business owners an overview of the following areas related to Texas payroll services:
Texas Wage and Hour Laws
Employees covered by the Texas minimum wage law must be paid $7.25 an hour.
All employees are covered except for:
- those working in an executive, administrative, or professional capacity;
- outside salespersons and collectors on commission;
- certain agricultural employees;
- those under age 18 who are not vocational or high school graduates; and
- students under age 20, except those in agriculture.
Texas Payroll for Employers
Employers covered by the Texas wage payment law must pay wages at least semi-monthly. However, monthly payments are allowed for employees who are exempt from the overtime provisions of the federal Fair Labor Standards Act. If employers do not designate other days, paydays must be on the first and 15th days of each month.
All employees are covered, except those specifically exempt by statute; among those exempt are independent contractors and certain family members.
Taxable Wage Base ($000s): 9,000
New Employer Rate (% Taxable Wages) 2.7**
Texas Unemployment Insurance
You are liable for these unemployment taxes in Texas if:
- You have at least one employee for a day or part of a day during 20 weeks of a calendar year. These weeks do not have to be consecutive.
- You paid wages in a calendar quarter of $1,000 or more for domestic service; $6,250 or more for farm or ranch labor; or $1,500 or more for any other labor.
- You acquired your business.
- You are subject to the Federal Unemployment Tax and had any employees in Texas.
- You employed a seasonal worker on a truck, farm, orchard or vineyard; or migrant workers on a farm or ranch; or seasonal workers, who did the same work in the same place and time as migrant workers.
- You had 3 or more people, performing farm or ranch labor, during 20 weeks of the year.
Registering for Unemployment Taxes
The Texas Workforce Commission allows you to register online for unemployment taxes. You'll need the following materials to register:
- Email address of business contact.
- Payroll information, such as employment history for employees, when wages were first paid and the amount of your quarterly wage payments.
- Names of any previous owners.
- Social security numbers for business owners.
- Any business mailing addresses.
- Understanding of the products and/or services offered by the business.
The following employer types are not liable for unemployment insurance taxes in the state of Texas:
- Customers/clients of independent contractors.
- Extremely small employers that pay less than $1,500 in wages in a year.
- Exempt employees.
Texas Income Tax Withholding
Only Texas, Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Washington, and Wyoming have no state income tax.
Employer Right to Schedule Voting Hours Unspecified
Pay Deduction for Voting Time Leave Prohibited
Texas requires employers to allow employees sufficient leave time to vote.
All employers in Texas must allow employees time off to vote. This summary is restricted to coverage of private employers.
The law does not specify the exact amount of leave time that must be granted. Employers do not have to grant leave time to employees who have two consecutive non-work hours to vote.
Texas State Tax Resources
This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs.